Friday, 6 March 2009

Research Paper: China's New Labour Contract Law: No Harm to Employment?

The current recession has meant that many academic papers are "born" out of date. Once a paper is submitted to a journal it can take up to 2 years for it to come out in print. This is a major failing in academic economics although some improvements have been made in recent years.

The problem remains the uncooperative nature of overworked and under rewarded referees.

For example, this paper looks very interesting and I suppose China can still be considered "fast growing", just not quite as fast as before.

The labour market is another issue entirely with rapidly rising unemployment more on which later. The guys over at "China Law Blog" may well be perplexed at economists throwing a load of equations on the issue of employment law.

"China's New Labour Contract Law: No Harm to Employment?"

BOFIT Discussion Paper No. 29/2008

MICHAEL FUNKE, University of Hamburg - Department of Economics and Business Administration, CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
YU-FU CHEN, University of Dundee - Department of Economic Studies

In January 2008, China adopted a new labour contract law. This new law represents the most significant reform to the legislation on employment relations in mainland China in more than a decade. The paper provides a theoretical framework on the inter-linkages between labour market regulation, option value and the choice and timing of employment. All in all, the paper demonstrates that the Labour Contract Law in its own right will have only small impacts upon employment in the fast-growing Chinese economy. Rather, induced increasing unit labour costs represent the real issue and may reduce employment.



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